<BREAKFAST WITH THE FOOL>

Tuesday, June 22, 1999

"The greatest achievement of the human spirit is to live up to one's opportunities and to make the most of one's resources." -- Vauvenargues

Latest Market Numbers

Abbott to Acquire Alza

Abbott Park, Illinois-based diversified health care company Abbott Laboratories (NYSE: ABT) announced it will acquire Alza Corp. (NYSE: AZA), a Palo Alto, Calif.-based drug maker focused on research, in a stock swap valued at about $7.3 billion, or $53.025 a share. That's a 14.6% premium to Alza's close yesterday of $46.25 and almost 50% higher than its stock price at the beginning of the month, before it won the backing of an FDA panel to expand the use of one of its cancer drugs and before takeover rumors surfaced. Alza shareholders will receive 1.2 Abbott shares for each Alza share.

Alza will bring to Abbott a much-needed growing portfolio of drugs and drug-delivery technologies, which should broaden Abbott's portfolio and accelerate its long-term growth potential. Alza is particularly strong in the areas of oncology and urology. Meanwhile, Abbott's global sales network and deeper pockets should widen the distribution of Alza's products worldwide and boost its research and development efforts.

But Abbott will likely be hit today, as it disclosed that the merger will dilute 2000 earnings by $0.03 a share, though it will be accretive to earnings thereafter. It will also result in a one-time $100 million charge in 1999. Last year, Alza's sales totaled $646.9 million, and it earned $108.3 million. Abbott's sales and earnings were $12.5 billion and $2.3 billion, respectively.

News To Go

The board of telecommunications company US WEST (NYSE: USW) said it has reviewed the unsolicited acquisition offer made by Qwest Communications (Nasdaq: QWST) on June 13 and has decided to "take no action at this time." It explained that it continues to believe that its proposed merger with Global Crossing (Nasdaq: GLBX) announced May 17 "provides significant value to US WEST's shareholders and will ensure that the strategic vision of US WEST will be implemented."

General Dynamics (NYSE: GD) has agreed to buy three units of GTE's (NYSE: GTE) Government Systems organization for $1.05 billion in cash. The deal is expected to be immediately accretive to General Dynamics' earnings. GTE Government Systems is a leader in communications and intelligence systems; electronic defense systems; and information systems for defense, government, and industry. The units being acquired are expected to bring in revenues of about $1.2 billion this year.

Earnings Warnings: Paper maker Consolidated Papers (NYSE: CDP) expects second-quarter earnings to fall short of analysts' estimates due to pressure on sales from lower-priced imports of coated printing papers... Textile company Dan River Inc. (NYSE: DRF) said Q2 EPS likely will come in between $0.13 and $0.15, below analysts' expectations of $0.18.

Earnings to Go: (Quarterly earnings per share versus that of the same year-earlier quarter and compared with analysts' mean estimate. Earnings exclude one-time charges and gains.)

Cabletron Systems (NYSE: CS) -- fiscal Q1 EPS: $0.04 (before charges) vs. breakeven last year; estimate: $0.01

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor